Pragmatic Outsourcing

Pros and Cons of Outsourcing to Brazil

A couple months ago I was talking with Alexandre, a project / account manager from a mid-sized service provider based out of Campinas, an industrial city North of Sao Paulo, Brazil. Alexandre’s team did a great job on one of my past projects and we continue to stay in touch after the engagement ended. The question of Pros and Cons of Brazil outsourcing inevitably came up and I committed to writing this post after some follow with my network and learning a bit more about the destination.

Brazil, the first country in the famous BRIC acronym is not one of the first names that come to mind when you consider IT offshoring destinations. I am sure that overtime that will change and Brazil will gain a permanent spot on the list of top players in technology outsourcing. You would probably agree with me if you look just at the list of Pros of that destination; the Cons may affect your opinion but won’t dramatically change it.

Let’s start with Gartner rating for Brazil which I agree to some degree:

English Skills. English is a very popular skill and not hard to find with technical professionals in Brazil. However, it’s no match to what you find in India. As a matter of fact when you focus on technical skills sooner or later you will find yourself compromising on English fluency.

Government Support. Very interesting topic. According to my connections in Brazil government is unusually supportive in developing IT outsourcing however results of it remain to be seen.

Infrastructure. Unless you partner with a very small provider located in a remote province city you will find infrastructure that meets reasonable expectations. In my / my network experience telecom and other aspects of the infrastructure are excellent.

Labor Pool / Access to Resources. Brazil employs one of the largest IT communities in the world. The IT work force is large and experienced. This is also a highly educated professional work force as Brazilian universities are fairly competitive to get into and rather inexpensive to stay in. Of course in sheer numbers Brazil falls far behind India and China. Finding top-notch technical resources in Brazil is not easy like everywhere else in the world, yet is possible, even when it comes to cutting edge technologies and methodologies.

Educational System. I can not completely agree with Gartner here, while education system in Brazil is not as stellar as in Argentina or Canada when considered from IT stand point it’s at least at par with Chile and Mexico. In my experience the quality of recent grads with CS degrees is very good and that’s rates high on my book.

Cost. Pure comparison of the rates with India or China puts Brazil in serious disadvantage. Based on a limited sampling of rates I had access to it is 30-80% higher than rates for comparable resources in India. The difference could be even higher if you try to take into consideration the tier of the city and vendor. On the other hand, as I mentioned numerous times, rate is only a guideline to cost, the total cost of outsourcing has a considerably lower difference.

Operating Environment. Air travel to Brazil is convenient and affordable. Sao Paulo is a 10 hour direct flight from Atlanta, GA. Small time difference and thus no jetlag make a huge difference in overall comfort of travel. Finding excellent and fairly affordable hotels, restaurants and other creature comforts is easy. With a little support from your vendor chances are you will stay in safe areas and won’t need to deal with crime which is unfortunately a serious issue in the country. Getting things done requires understanding of the system and is manageable. One of the big Pros of the country that came up many times in my discussions was absence of natural disasters

Nearshore advantage. When it come to US based customers Brazil offers nearshore model which is an advantage of high caliber especially for agile projects. Time difference, travel ease, low cultural barriers, etc. institute a huge Pro for Brazil which offsets its high rates to a large degree.

Cultural Compatibility. In my experience as well as according to everyone I checked with cultural differences are very easy to deal with. As a matter of fact when I asked around within my network I heard more about cultural similarities rather than differences. Of course the differences are there and they can not be ignored, here are just a few to consider:

• First and foremost language issues makes a huge imprint on communications, watch out for idiomatic expressions and professional lingo.

• Work / life balance. While many of guys in my Brazilian teams worked crazy hours the attitude towards work / career / life balance was quite different, and that is particular notable if there is a beach nearby.

• In my experience working with Brazilian teams as I noticed that it developers very long time before they could to offer their opinion or disagree with USA team members. That was quite different from Indian “never say no”, it appeared more like fascination with US tech workforce and overly humble judgment of own abilities. Very similar sentiment came from my network as well.

• Facts and technical quality of the solutions carried less weight with Brazilian team than perceived “authority” of individual. There was also much higher level of sensitivity towards “people feelings” than the one you would typically observe in the states; sometimes to determent of the project.

• And, in my opinion, common for the entire region tendency to put very high emphasis on theory and academic values versus pragmatic business decisions.

Resource Quality / Technical Capability. IT outsourcing in Brazil doesn’t seem to be in the same cut-throat competition with other IT employers as in India. It seems that Brazil is still in a stage when working for outsourcing company considered prestigious and highly desired job. In that light getting your hands on top notch resources is still possible.

Turnover Ratio. Turnover ratio claimed by the vendors is low and that has been my experience as well. My limited scope survey gave very positive results with average about 13%. The attrition was also of general nature mainly family issues or education. Not too much of job hopping or inter-company transfers.

There is one more issue worth mentioning – finding vendors in Brazil is not as easy as it should be. Hopefully the latest efforts of several outsourcing vendors combined with the government support give us a solid provider directory which will help us in finding those perfect matches made in IT heaven. But for now consider these links as the humble beginnings – www.softex.br, www.brazil-it.com, www.actminds.com, and www.brasscom.org.br.

January 7, 2009 Posted by Nick Krym | Offshore Vendor Selection | Nearshore, Offshore Tips | 7 Comments